The European future of the Western Balkans: Thessaloniki@10

Executive summary
tunity for the EU to learn from experience and to evolve and adapt to its own and local
needs. As a result, the CSDP has come to be one of the most potent tools that the EU
has available for the transformation of conflict-afflicted areas into zones of stability and
order. This chapter demonstrates that, beyond boosting EU capabilities in external action,
these missions have played a critical role in reforming security sector institutions
and supporting statebuilding in the Western Balkans. However, the ongoing challenges
and unresolved political tensions that exist both inside and between the countries of the
region point to the limitations that CSDP missions face in consolidating peace.
Chapter 6 (Lidija Topic) analyses the progress and the challenges encountered in the field
of regional cooperation. The harsh economic and social consequences of the unstable
political environment of the 1990s, along with the effects of the economic crisis, have
defined the priorities on the regional cooperation agenda in the post-Thessaloniki period.
Considerable efforts have been made in the socio-economic, political and security
areas of regional cooperation. Initially externally driven, regional cooperation has
become more and more regionally owned. However, the main challenges in the region
remain the inter-ethnic governance, status and name issues in Bosnia-Herzegovina, Kosovo
and the former Yugoslav Republic of Macedonia. The region has recognised the
importance for its future of integrating the EU 2020 objectives and adapting them to
the regional development agenda, whose cornerstone is ‘job-creating growth’, and drawing
all relevant stakeholders together around this common effort: government representatives,
the donor community and operating regional platforms.
Chapter 7 (Milica Uvalic) focuses specifically on economic development in the Western
Balkans since the Thessaloniki Summit. Until 2009 when the effects of the global economic
crisis began to be felt, the Western Balkan countries registered high growth rates,
declining inflation, rapid expansion of foreign trade and increasing foreign direct investment
(FDI). A number of important economic reforms related to the transition to
a market economy had been successfully implemented. The announced prospects of
EU membership, trade liberalisation, substantial financial assistance and conclusion of
Stabilisation and Association Agreements undoubtedly contributed to such positive developments.
Since 2003 we have witnessed fast EU–WB economic integration through
increasing trade, FDI, banking and financial integration. However, the Western Balkan
economies are also facing a number of structural problems, including very high unemployment
rates and severe external imbalances, and are handicapped by the slow process
of catching up with the more developed parts of Europe. These problems became
evident particularly after the global economic crisis hit the region quite severely in late
2008. Although EU policies have greatly facilitated growth and economic development
(until 2009), increasing EU–Western Balkan integration has also rendered these econo-
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